Not only is 96% of mortgage debt in the U.S. fixed rate, but 38.5% of homeowners don't have a mortgage at all.
40% of Americans Pay Off Their House — Are They Doing Better Financially? For most Americans, a home mortgage is the biggest financial obligation they will ever have. A traditional mortgage spans 30 years and is often in the hundreds of thousands of dollars, so the interest charges can be enormous.
By 2023, this number had increased to 39.8% of homeowners, with 34.1 million homeowners having fully paid off their mortgages. Over the past 13 years, the share of mortgage-free homeowners has reached a record high level. Older homeowners are more likely to have fully paid off their mortgages.
New York (54.3%), California (55.3%), and Hawaii (61.3%) have the three lowest rates of homeownership among states.
The survey found that 63% of Americans can't afford to buy a home this year, with 87% of Gen Z unable to and 62% of millennials unable to. Given the housing market, 1 in 4 surveyed no longer believe that homeownership is a good investment in the long run, and 1 in 3 don't believe it should still be the American dream.
About 27.8% of 24-year-old Gen Zers are homeowners compared to 24.5% of millennials when they were the same age.
There is no specific age to pay off your mortgage, but a common rule of thumb is to be debt-free by your early to mid-60s.
One of the most significant benefits of paying off your mortgage is the peace of mind that comes with owning your home outright. Without a mortgage, you don't have to worry about monthly payments, which can be especially comforting in retirement or during economic downturns.
Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve. That figure factors in every type of debt, from credit card balances and student loans to mortgages, car loans and more. The exact definition of debt free can vary, though, depending on whom you ask.
Rental prices are unaffordable for a record number of Americans, with half of all renters paying more than 30 percent of their income on rent and utilities. That's according to a new report from Harvard's Joint Center for Housing Studies that examined 2022 census data.
For example, if you plan to travel frequently in retirement, you may want to aim for 90% to 100% of your pre-retirement income. On the other hand, if you plan to pay off your mortgage before you retire or downsize your living situation, you may be able to live comfortably on less than 80%.
Average American Debt Load
That breaks down into $241,815 on average in mortgage debt, and an average of $23,317 in non-mortgage debt (including credit card, student loan, auto loan and personal loan debt). But these debt balances vary greatly depending on age group.
Similarly, states along the Pacific Coast—where home values skyrocketed during the pandemic—have some of the lowest rates of free-and-clear homeownership among the working-age population. California (22.7%), Washington (22.8%), and Oregon (22.9%) sit at 45th, 44th, and 43rd out of all 50 states, respectively.
27% of U.S. adults have no emergency savings, as of May 2024 polling — the highest percentage since 2020. People are working hard on their finances.
There were over 102 million renters (31.7%) in the U.S. compared to 221 million homeowners (68.2%), according to the official 2021 figures. The number of renters in the country has fluctuated year-on-year for the past six years, with 33.5% of people renting in 2014.
To O'Leary, debt is the enemy of any financial plan — even the so-called “good debt” of a mortgage. According to him, your best chance for long-term financial success lies in getting out from under your mortgage by age 45.
Dave Ramsey, the renowned financial guru, has long been a proponent of financial discipline and savvy money management. This can include paying off your mortgage early, but only under specific financial circumstances.
Some 18 percent of the state's 13.7 million households live in a house they own without a mortgage, the Orange County Register reported, citing 2023 U.S. Census Bureau figures. Across the nation, 26 percent of the 131 million households are mortgage-free.
There's no age limit for getting or refinancing a mortgage. Thanks to the Equal Credit Opportunity Act, seniors have the right to fair and equal treatment from mortgage lenders.
An unmortgaged home was once a retirement perk
Mark Iwry, nonresident senior fellow at the Brookings Institution. But that pattern is changing. In the Michigan study, researchers found that the share of retirement-age homeowners with mortgages rose from 38% to 51% in a generational span of about 25 years.
Average American Debt by Age
Here's a look at how much nonmortgage debt Americans have by age group, and the average non-mortgage per capita debt for each group: 18-29-year-olds: $69 billion total, $12,871 average. 30-39-year-olds: $1.17 trillion, $26,532 average. 40-49-year-olds: $1.13 trillion $27,838 average.
Baby boomers have the highest net worth, averaging $1.6 million per household. Baby boomers have the highest household net worth of any US generation.
While baby boomers—defined as Americans between the ages of 60 and 78 in 2024—comprise just over 20% of the U.S. population, they account for more than 37% of homeowners nationwide. This generational footprint is particularly pronounced in New England and select coastal states.